Gov. Jerry Brown’s revised 2015-16 budget unveiled Thursday continues to press for changes for current and future state employees – cuts to the state’s medical costs and sweeping changes to the civil service system.
The document also mentions that the administration is bargaining contracts with four unions, but said nothing about what Brown expects to come of those talks.
Employee compensation costs are expected to rise $57 million in 2015-16, according to the summary, “driven primarily by increases in health care premiums and enrollment.”
As Brown first proposed in the January draft of the budget, state workers would start contributing toward their retiree health benefits and future hires would work longer for their post-employment medical coverage. Currently, employees pay nothing in advance for the post-employment benefit, which offers up to 100 percent medical coverage for life.
The state pays retirees’ medical bills as they come due, nearly $2 billion for the current fiscal year. The state estimates it has promised $72 billion worth of medical care to state workers over the next 30 years for which nothing has been set aside, and the unfunded liability is growing.
Brown’s plan envisions advance contributions that would go into a trust fund and tapped in about 30 years. That would eliminate the unfunded liability and subsidize costs going forward, much like a pension program. The pay-ahead plan, according to the administration, would save the state a cumulative $240 billion over the next 50 years.
Future employees would have to work longer than the current 10 years to qualify for partial retiree medical coverage. Brown’s earlier proposal suggested a 15-year threshold to qualify for 50 percent of the state’s subsidy, up to 25 years for 100 percent.
Brown’s proposal anticipates bargaining those changes with labor unions.
The administration also wants CalPERS, which administers the state’s health insurance programs, to offer cheaper policy options. The fund would also have to provide more reports and submit to more oversight of its medical insurance business.
The budget proposal also touts moves made to improve the state’s civil service system, noting that “over 28 different teams (including state employees, public employee representatives, and other stakeholders)” are working on modernizing the government’s personnel business.
The document notes that Brown is in talks with unions representing correctional officers, engineers, scientists and craft and maintenance employees whose contracts expire in July.